Pre-Owned Games Are Costing The Industry More Than Piracy

Photo: Daniel Goodman / Business Insider

Currently there are a lot of rumours within the gaming industry concerning the future of pre-owned video games. Developers, such as Lionhead, have been claiming that second hand sales have actually cost them more than piracy.Honestly though, that isn’t hard. You can’t go to an online game store, or into a physical store, without seeing tonnes of pre-owned games. And on top of that, the common opinion is that pirated console games are just too much faff with the amount of patches and updates you are made to install regularly.

Frankly, people look to second hand games, for they feel the prices are too expensive for brand new ones – and they have a point! Who wants to shove nearly 50 quid over the counter for the brand new COD when they could just wait a few months and get it cheaper? 

Chain Reaction

Prices of new games will continue to rise if consumers continue to purchase second hand games. In Q4 of 2011, the UK spent just under a hundred million pounds on pre-owned games and in total a predicted 47.3 million people buy used games every year. This inevitably means that as new copies sell less and less, the price of new games will rise. With many people citing the price of new games their main reason for purchasing a pre-owned game, you can start to see how this chain reaction exists.

Rather than simply using price points to deter customers away from used games and increase sales in new products, some developers and publishers are starting to get creative with new technology.

Valve & Steam

Take games developer Valve for example. Valve was established in 1996, 16 years ago with 30 employees as they began to develop Half Life – and in 2012 the company is worth 4 billion dollars, with 293 employees employed. Recently, Forbes listed Valve founder Gabe Newell as 854th richest billionaire in the world. So, how are Valve doing so well out of this gaming recession potentially caused by pre-owned games? ‘Steam’ is the answer.

To exemplify the greatness of Steam, Valve’s online marketplace offers both Portal games for under the price of five pounds – brand new. Steam offers an absolutely cracking collection of mainstream, indie and even free-to-play games to audiences throughout the world. People naturally prefer to buy brand new games, and Steam recognises that fact and offers them a compromising solution to their problems. You may argue that this is limited to PC owners, however Valve have announced they will be releasing a Steam Console in the future. 

Digital Market & Cloud Gaming

E3 has just passed us, lacklustre in content (except of course with the fascinating looking Wii U). The lack of console announcements from Microsoft and Sony show that they are still pondering over a few things. 

Cloud gaming is something which is turning the heads of people in the industry due to the fact that it could eliminate the need for pre-owned games – or even a console. Cloud gaming streams games live to your television from dedicated servers, and the consumer needs only a gaming controller to be able to play.

With the industry investing more time and money in the digital realm, (the digital games market now accounts for a quarter of all games purchases) it leaves consumers wondering whether games for next gen consoles are still going to be sold in the physical realm at all. This would surely destroy the pre-owned games market for good? Surprisingly enough Microsoft & Sony have announced that the Xbox 720 and the PS4 will both feature an optical drive. Why? Sony and Microsoft understand that not every person in the world has access to an uber-fast connection…and they also understand that some people simply like owning products in its physical form.

EA’s vs Pre-Owned

With the promise of optical disks in next gen consoles, consumers might be finding developers working their sneaky ways to perhaps dissuade people buying physical discs. For example, EA implements an online pass system on some of their games – which unlocks special features and content for the original buyer. If the game is sold on, second-hand owners have to purchase that content themselves from EA with a brand new online pass. However, on reflection maybe this is not such a good idea. Gamers will receive less money from pre-owned games retailers for their copy of a restricted game, so the average consumer will have less money to spend overall on new games – which is not good for developers. 

A Final Note

To sum up, new games are too expensive, pre-owned games are thriving, developers need more money and digital is the future. The next five years will mark an interesting time for the industry and we are already seeing smaller developers looking for new ways to make money with new technology incorporated into their games. Take Double Fine for example. Double Fine made 3.5 million dollars in 30 days – without selling a single game. How did they know this? Through a kickstarter campaign. Nearly a hundred thousand people pledged a minimum of 15 dollars which guaranteed the ‘finished game in all its glory’. That is nearly a hundred thousand games sold without the actual game being released or even being even made.

Pre-owned cars/ Pre-owned TVs/Pawn Shops…the list goes on. Selling-on used goods is part of human nature, to recycle what we don’t want or need. Instead of restricting consumers, developers should be looking at ways of enticing their fan-bases into buying their game first hand – just like Double Fine & Valve have demonstrated so well. Time will only tell.

Many thanks to Ladbrokes Games for their help with this article.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.